Fiscal deficit till July touches 87% of Budget target

India's fiscal deficit until July reached 87% of the full fiscal year target, marginally higher than 85.7% in the same period last year. The fiscal deficit for the April-July 2008 stood at Rs 1,15,980 crore on account of higher plan expenditure, data released by the Controller General of Accounts showed on Friday.

The government would be able contain the deficit within the target of budget 2008-09, finance minister P Chidambaram said in Mumbai on Friday before the release of deficit figures.

The Centre’s revenue deficit too rose sharply to 181.6% of the budget estimate by end of July to total Rs 1,00,213 crore. It stood at 115.3% of the budget estimate in the same period last year.

The deficit is usually higher in the earlier part of the fiscal year as allocations are made in the beginning and major chunk of taxes are received at the end of the fiscal year.

Deficit is the excess of government's expenditure over its revenue and a higher deficit means government need to borrow more. Crisil principal economist DK Joshi said it was too early to draw any conclusions from the data till July.

However, bringing some joy to the Exchequer, deposits to the National Small Saving Fund (NSSF) has exceeded its budget estimate of Rs 53.27 crore to amount to a whopping Rs 3613.95 crore within the first four months of this fiscal. This translates into 6784% of the BE, up sharply from a negative 1000% of the budget estimate. With stock markets continuing to be shaky, investments into public provident funds till July 2008 rose to Rs 5052.97 crore or 41% of that estimated in the budget.

Total revenue of the Centre was up at Rs 1,18,740 crore, or 19.2% of the budget estimate, higher than 18.6% in the previous year. Revenue receipts amounted to Rs 1,17,869 crore, or 19.5% of the budget estimate.

The government's expenditure amounted to 31.3% of the budget estimate, at Rs 2,34,720 crore, down from 33.5% of the estimated expenses in the same period last year. The interesting aspect of the expenses is that the plan expenditure rose whereas the non plan expenditure declined.

The government's confidence to meet the fiscal deficit target stems from higher tax collections, money from auction of 3G spectrum, dividend payment by the RBI as well as adoption of austerity measures.

The finance minister said the Fiscal Responsibility and Budget Management (FRBM) target of reducing fiscal deficit by 0.3% will be met this fiscal.

In Budget 2008-09, the Finance Minister has targeted to bring down the fiscal deficit to 2.5% of GDP, although analysts argue the government may overshoot this target due to expenses on account of civil servant’s salary hikes, farm loan waiver, higher spend on national rural employment guarantee scheme, among others.

 

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